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Oil and Gas Operations Stocks Making Big Moves on June 29, 2012
The Nasdaq has moved up 2.4%, the S&P 500 has risen 1.9% and the Dow has increased 1.7%, marking a bad morning for the market.
The Oil and Gas Operations sector (DIG) is up 4.4%, outperforming the market overall. The biggest movers in the sector so far are:
Broker Summary: TD Ameritrade Thinkorswim
Increasing 7%, Cimarex (NYSE:XEC) is trading at $54.28 per share. With 709,221 shares changing hands so far today, the company's volume is 0.7 times the current three-month average. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. XEC has a gross profit margin of 80.8%, which is on the high end. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. With a net profit margin of 29.5%, the company has a high one compared to its gross profit margin. This usually means that it also has one or more advantages over its competition. Investors trying to assess a company's ability to continue to pay its fixed expenses even if its business declines may want to evaluate the operating margin ratio. XEC has an operating profit margin of 39%.
Valuation ratios include the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for XEC is 3.69, which is relatively high. This could be a good sign if the share price increases. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
Clayton Williams Energy (Nasdaq:CWEI) is currently trading at $47.22 per share, a 6.9% increase. The company's volume for the morning is 60,121 shares. This is 0.4 times its current daily average. A stock's volume conveys how excited investors are about it. Margin analysis is a great way to understand the profitability of companies. The gross profit margin for CWEI is 67.1%. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. Operating profit margin for CWEI is 24.6%. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. Net margin is 25.8%.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. CWEI has a capitalization ratio of 64%, which is on the high end. A company considered too highly leveraged (too much debt) may find its freedom of action restricted by its creditors and/or have its profitability hurt by high interest costs. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
Plains Exploration & Production (NYSE:PXP) is at $34.58 per share after an increase of 5.4%. So far today, the company's volume is 1.3 million shares, lighter than yesterday's volume of 2.5 million shares. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. PXP has a gross profit margin of 73.5%. Net profit margin is a good ratio for determining how a company is performing. Net margin is 2.5%, which is high relative to its gross profit margin. Companies with profit margins reflecting a competitive advantage are able to improve their market share during the hard times - leaving them even better positioned when things improve again. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. PXP's operating profit margin is 32.7%.
Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. PXP's D/E ratio of 124% is on the high side. Generally, a high D/E ratio means that the company may have difficulty generating enough cash to pay off its debts. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
EOG (NYSE:EOG) has risen 5% and is currently trading at $89.46 per share. So far today, the company's volume is 1.8 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. EOG's gross profit margin of 84.3% is fairly high. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. EOG's operating margin of 19.9% and net margin of 11.6% are high relative to its gross margin.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. EOG's debt ratio of 49.2% is on the low side. A low debt ratio means the company has more available cash flow. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.
Continental Resources (NYSE:CLR) has risen 4.2% to hit a current price of $65.60 per share. At 735,842 shares, the company's volume so far today is 0.5 times the average volume over the last three months. The trading volume for a stock indicates the level of investor interest. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. CLR's gross profit margin of 87.4% is on the high side. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. CLR has an operating profit margin of 34.3% and a net profit margin of 33.2%, both high compared to its gross profit margin.
While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. CLR's P/E ratio of 18.2 is under the industry average of 21.35. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Investment Valuation Ratios: Price/Earnings Ratio
SM (NYSE:SM) has increased to a share price of $47.69, a 4.1% rise. So far today, the company's volume is 495,716 shares. This is 0.3 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. SM's gross profit margin is 72.5%. Relative to its gross profit margin, SM's operating profit margin of 14.9% and net profit margin of 17.5% are high.
Valuation ratios like the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield are useful in determining how attractive a potential or existing investment is. The price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. SM has a PEG ratio of 0.68. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
CNOOC Limited (NYSE:CEO) has moved up 3.8% and is currently trading at $199.51 per share. The company's volume is currently 53,279 shares for the day, below yesterday's volume of 157,239 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. CEO's P/B ratio of 2.13 shows that its share price is higher than its book value. This may be a sign that the company is overvalued. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Oil and Gas Operations sector (DIG) is up 4.4%, outperforming the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| Cimarex Energy Co. (NYSE:XEC) | $4.35 billion | +7% |
| Clayton Williams Energy, Inc. (Nasdaq:CWEI) | $537.1 million | +6.9% |
| Plains Exploration & Production Company (NYSE:PXP) | $4.23 billion | +5.4% |
| EOG Resources (NYSE:EOG) | $22.96 billion | +5% |
| Continental Resources, Inc. (NYSE:CLR) | $11.4 billion | +4.2% |
| SM Energy Co. (NYSE:SM) | $2.94 billion | +4.1% |
| CNOOC Limited (ADR) (NYSE:CEO) | $85.84 billion | +3.8% |
Increasing 7%, Cimarex (NYSE:XEC) is trading at $54.28 per share. With 709,221 shares changing hands so far today, the company's volume is 0.7 times the current three-month average. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. XEC has a gross profit margin of 80.8%, which is on the high end. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. With a net profit margin of 29.5%, the company has a high one compared to its gross profit margin. This usually means that it also has one or more advantages over its competition. Investors trying to assess a company's ability to continue to pay its fixed expenses even if its business declines may want to evaluate the operating margin ratio. XEC has an operating profit margin of 39%.
Valuation ratios include the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for XEC is 3.69, which is relatively high. This could be a good sign if the share price increases. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
Clayton Williams Energy (Nasdaq:CWEI) is currently trading at $47.22 per share, a 6.9% increase. The company's volume for the morning is 60,121 shares. This is 0.4 times its current daily average. A stock's volume conveys how excited investors are about it. Margin analysis is a great way to understand the profitability of companies. The gross profit margin for CWEI is 67.1%. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. Operating profit margin for CWEI is 24.6%. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. Net margin is 25.8%.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. CWEI has a capitalization ratio of 64%, which is on the high end. A company considered too highly leveraged (too much debt) may find its freedom of action restricted by its creditors and/or have its profitability hurt by high interest costs. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
Plains Exploration & Production (NYSE:PXP) is at $34.58 per share after an increase of 5.4%. So far today, the company's volume is 1.3 million shares, lighter than yesterday's volume of 2.5 million shares. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. PXP has a gross profit margin of 73.5%. Net profit margin is a good ratio for determining how a company is performing. Net margin is 2.5%, which is high relative to its gross profit margin. Companies with profit margins reflecting a competitive advantage are able to improve their market share during the hard times - leaving them even better positioned when things improve again. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. PXP's operating profit margin is 32.7%.
Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. PXP's D/E ratio of 124% is on the high side. Generally, a high D/E ratio means that the company may have difficulty generating enough cash to pay off its debts. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
EOG (NYSE:EOG) has risen 5% and is currently trading at $89.46 per share. So far today, the company's volume is 1.8 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. EOG's gross profit margin of 84.3% is fairly high. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. EOG's operating margin of 19.9% and net margin of 11.6% are high relative to its gross margin.
Continental Resources (NYSE:CLR) has risen 4.2% to hit a current price of $65.60 per share. At 735,842 shares, the company's volume so far today is 0.5 times the average volume over the last three months. The trading volume for a stock indicates the level of investor interest. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. CLR's gross profit margin of 87.4% is on the high side. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. CLR has an operating profit margin of 34.3% and a net profit margin of 33.2%, both high compared to its gross profit margin.
While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. CLR's P/E ratio of 18.2 is under the industry average of 21.35. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Investment Valuation Ratios: Price/Earnings Ratio
SM (NYSE:SM) has increased to a share price of $47.69, a 4.1% rise. So far today, the company's volume is 495,716 shares. This is 0.3 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. SM's gross profit margin is 72.5%. Relative to its gross profit margin, SM's operating profit margin of 14.9% and net profit margin of 17.5% are high.
Valuation ratios like the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield are useful in determining how attractive a potential or existing investment is. The price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. SM has a PEG ratio of 0.68. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
CNOOC Limited (NYSE:CEO) has moved up 3.8% and is currently trading at $199.51 per share. The company's volume is currently 53,279 shares for the day, below yesterday's volume of 157,239 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. CEO's P/B ratio of 2.13 shows that its share price is higher than its book value. This may be a sign that the company is overvalued. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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